Growth Rate Volatility

A key part of the phenomena of economic growth that is often misunderstood is to imagine that "growth rates" are relatively stable across countries--that the world/data consists of "rapidly growing" and "slow growing" countries (e.g. Japan and Argentina) and the key is to explain those differences. This focus on cross country differences is reinforced by attention bordering on obsession with the "East Asian Tigers." However, these countries are the exception, not the rule. In fact, most countries do not have stable rapid or stable slow growth, rather countries have enormously large shifts in growth rates over the medium run (longer than the "business cycle", shorter than the "steady state") such that there is (a) little correlation across periods in cross national growth rates (w/o the Tigers it is essentially zero) and (b) there are a variety of patterns of the shifts in growth as countries appear to have discrete, identifiable, episodes of growth acceleration or deceleration.